During their three-hour, high-stakes powwow in an upstairs room in Arafat’s besieged compound in the West Bank town of Ramallah, Powell demanded that the Palestinian leader rein in homicide-bomber terrorists.

But Arafat immediately retorted that Israel must first pull out of occupied Palestinian towns.

“We told Secretary Powell that we shall not discuss any subject before Israel pulls out,” said Palestinian Parliament Speaker Ahmed Quriea, who was at the tense meeting.

“We told him that it’s time to speak about a Palestinian state along the lines” that existed before the 1967 Six-Day War, Quriea said.

After the meeting, a tight-lipped Powell would only refer to the session as “useful and constructive.”

Sources said he made it clear to Arafat that the United States wants action in stopping the terrorists.

Powell has already warned Israeli Prime Minister Ariel Sharon that the United States wants Israel to take immediate steps to begin a pullout from Palestinian towns.

Israel’s military invaded the areas after Palestinian-backed terrorists launched their latest deadly wave of homicide bombings against Israel last month.

Arafat, in an Arabic monologue to Powell that lasted longer than an hour during the session, raged about the destructive takeover – even demanding that Israel rebuild the regions it has decimated since its invasion 17 days ago.

Yesterday’s meeting pitted Powell and some of his top aides, including chief negotiator Anthony Zinni and U.S. Ambassador to Israel Daniel Kurtzer, against Arafat and three of his closest advisers. An interpreter translated Arafat’s Arabic for Powell.

Powell last night met alone with Sharon in Tel Aviv to update him on the session.

Israeli Gen. Shaul Mofaz told reporters afterward that “we know of no breakthrough” stemming from the talks between Powell and Arafat.

“We don’t believe that Arafat will do anything to stop the terrorist attacks,” he said, adding that Israel was bracing for a slew of new bombings on its independence day Wednesday.

For his part, Sharon only said Powell had endorsed the idea of a future regional summit among Israel, peace-friendly Arab neighbors – Egypt, Saudi Arabia, Morocco and Jordan – and “Palestinian representatives.”

Such a conference would be led by the United States, he said.

Powell, to try to shore up more regional support for his peace-seeking trip, was headed to Beirut, Lebanon, and Damascus, Syria today.

He is specifically expected to push the leaders of both countries to rein in the Hezbollah guerrillas along their borders. Groups of guerrillas, backed by Iran, have been firing on northern Israeli territories in an apparent effort to open a second front, thus weakening Israel power against Palestinians.

Powell is expected to return to Jerusalem tonight and then meet again with Arafat tomorrow.

Meanwhile, Israel’s Supreme Court told the army it must give the Palestinians the bodies of those killed in Jenin’s refugee camp.

There’s an acrimonious dispute about how many died. The army has rejected Palestinian claims that hundreds of people, many of them civilians, were killed. The army said it has found fewer than 40 bodies after searching half of the camp.

JORDAN: King Abdullah II. Moderate, seen as key to peaceful resolution in Middle East conflict. Kingdom is wedged in precarious corner with at least 60 per cent of its population being Palestinian.

SAUDI ARABIA: Abdullah Bin Abdul Aziz. Proposal to end conflict focuses on “land for peace.” Arab and Western leaders liked the deal. Israel rejected it. Offer of full relations with Israel seen as significant.

PALESTINIAN AUTHORITY: Yasser Arafat, Chairman. Accused of turning a blind eye to suicide bombers now trapped. Met with Secretary of State Colin Powell.

U.S.: President George W. Bush. Recently demanded Israel withdraw its troops from Palestinian territory. Has sent envoys to ease tensions but does not want to repeat mistakes of Clinton administration.

ISRAEL: Prime Minister Ariel Sharon. Hardliner. Acknowledges a Palestinian state will eventually be a reality. Refuses to give up more land and will not recognize Palestinian state until all hostilities end.

IRAN: President Mohammad Khatami. One prong in the “Axis of Evil.” Has supplied weapons and money to Hezbollah and Hamas and has stationed Revolutionary Guards in Lebanon.